Alibaba shares slide 5% after it disappoints on profit, curbs cloud spinoff

Chinese e-commerce giant Alibaba on Thursday reported quarterly profit that missed market expectations, and said it would not proceed with the full spin-off of its cloud intelligence group.

Its U.S. shares fell over 5% in pre-market trading following the news.

Here’s how Alibaba did in the June quarter, compared with Refinitiv consensus estimates:

• Net income attributable to ordinary shareholders: 27.7 billion yuan ($3.8 billion) versus 29.7 billion yuan expected.
• Revenue: 224.79 billion yuan ($31 billion) versus 224.3 billion yuan expected.

The Thursday results mark the first set of Alibaba earnings since veteran executive Eddie Wu succeeded former boss Daniel Zhang as CEO. As part of a broader management reshuffle, the company’s co-founder Joe Tsai also took over as chairman, Alibaba said in June.

Investors will be watching for key signs of the company’s progress following the reorganization of Alibaba into six individual business units — one of the most radical shake-ups in the company’s history. Alibaba is seeking initial public offerings for its cloud computing division and logistics division Cainiao.

The results also serve as an indication of the health of the Chinese consumer. Economists were expecting a boom in China’s economy following its emergence from Covid-19 lockdowns last year, but the rebound has proven more tepid, with a property crisis and other structural challenges posing risks to the country’s recovery.

— This is a developing story and will be updated shortly.